The insurers are mighty proud of themselves: three quarters of the damage caused by the storm Bernd in the summer of 2021 are regulated, the General Association of the German Insurance Industry (GDV) reported at the beginning of July. “Virtually every homeowner who was insured quickly received money from their insurance company,” the association said. Five billion euros of the total insured damage of 8.5 billion euros have already been paid out.
However, the Bonn lawyer Markus Gerd Krämer cannot share this enthusiasm. He represents around 80 clients from the particularly hard-hit Ahr Valley. He is worried about the outstanding quarter of claims. Not all insurers behaved in an exemplary manner, he criticizes. Some are simply inflexible when it comes to settling claims and stick to “scheme F”. Apparently, due to the high claims burden, others tried to delay payments or wear customers down until they were willing to compromise.
The fact that a year after the disaster, a quarter of the claims are not settled and more than 40 percent of the benefits have not yet been paid is not their fault, claim the insurers. Rather, the bottlenecks in building materials and the lack of craftsmen are to blame. Norbert Rollinger, head of the insurer R+V, which belongs to the cooperative financial sector, also referred to this. Rollinger’s vote carries weight, he is to become the new President of the GDV in September. “The money is ready, but we have no influence on the bottlenecks,” he said. The insurers Zurich and Gothaer argue similarly. Many of the damages are very complex, and there are also tradespeople and building materials that are difficult to obtain.
Both factors cannot be dismissed out of hand. But Kramer, a lawyer specializing in insurance law, sees the problems largely elsewhere, namely with the insurers. “The fact that 25 percent of the damage has not yet been settled is actually a hammer,” he said. In his opinion, it is mainly about the serious damage in the Ahr valley. “Basically, one can say that the not yet regulated district begins in Schuld and ends in Sinzig.” The fact that the “uncomplicated mass of 20,000 euros of damage” has already been finally settled is actually not worth mentioning, he thinks.
“Finally settled” does not mean that a claim has been adequately settled
The Düsseldorf specialist lawyer Mark Wilhelm is also skeptical about the success of the GDV. “You have to ask yourself which claims are already settled and which are still open,” he said. For him, too, there are some indications that a lot of minor damage in particular has already been dealt with. On the other hand, the cases that have not yet been concluded included a disproportionately high number of large and expensive claims. The fact that damage is “finally settled” according to the insurer does not necessarily mean that it is appropriately settled from the customer’s point of view, he emphasized.
After the flood, some claims adjusters from insurance companies tried to fob off customers with offers of payouts. This quick help was tempting for the customers, but the checks usually only covered part of the actual damage amount. “Many customers will have accepted these deals in their distress,” Wilhelm suspects.
Wilhelm notes a “strange regulatory behavior” by some insurers. Basically, it can be observed that the higher the sum, the more likely problems are between the customer and the insurer. “Of course, we only have the hard negative cases on the table,” he said.
A frequent dispute between insurers and customers: Does a badly damaged house, which has been washed through by muddy water not only on the ground floor but also on other floors, only have to be renovated or completely rebuilt? “Insurers quickly take the position that restructuring still works,” said Wilhelm. “Renovation costs only a third of a new building.” The problem is not only the water, which has severely affected the buildings, but also the leaking heating oil, which completely contaminates the walls and ceilings of the houses. “Here you can usually only tear down and rebuild because you can hardly get the heating oil out of the house,” says Wilhelm.
Most companies’ claims reserves were set far too low
Lawyer Krämer from Bonn complains that many insurers when processing the Bernd-Claims, things went wrong from the start – starting with recording the damage immediately after the disaster and determining the necessary provisions. There were far too few qualified experts who could recognize the true extent of the damage. The result: the claims provisions of most companies were set far too low. He emphasized that he did not want to blame the insurers at all in view of the overloaded claims departments and the extent of the damage, which was initially difficult to assess. “The insurers later found out how expensive the damage can be, which doesn’t look so bad at first glance,” says the lawyer. “We all learned from the event.”
However: Luckily, some insurers quickly realized that their established processes in the event of a claim in the event of an event such as Bernd are no longer practicable and their processes are accelerated as a result. Her customers and she herself would have benefited from this. Others carried on with their old boot, Kramer reported. He counts Debeka and Alte Leipziger among them. “Experts are sent out to ask for estimates, check them, delete things and then send them back, and so on,” he complained. So a lot of time goes by before the damage ends up on the insurer’s desk for the first time. “You just can’t approach an event like this as if it’s about a leak in the fitted kitchen.”
The insurers mentioned are fighting back. A spokesman for the Alte Leipziger dismissed the allegations as too general. Debeka can’t understand that either. “We have no interest in arguing with our customers or delaying operations and payments,” said a spokesman. In private residential building insurance, 83 percent of the damage has been finally processed. The remaining 17 percent are due to unavailable craftsmen.
Some insurers urged customers to settle for a partial payment
In the case of some companies, Krämer suspects that the long-winded processes are intended to spread the claims burden over time. “If an insurer can’t pay for all the damage at once because it’s too expensive, then he delays it.” Such an approach is very familiar to him given his many years as a lawyer in the legal departments of the insurers Ergo and Zurich.
Some insurers apparently realized last fall that the money reserved for the damage had been used up, he reported. Benefits that were still a long time coming at the end of 2021 were only paid out at the beginning of 2022. Some homeowners have received a refusal while the neighbor’s claim, which was reported a little earlier, was still being settled.
The tactic of wearing down customers from the Ahr Valley over time and then persuading them to make a comparison can also be seen. Some insurers urged customers to settle for a partial amount and then get the rest from the Investment and Infrastructure Bank Rhineland-Palatinate (ISB). However, in order to apply for government assistance to rebuild their building, flood victims must state whether they were insured – and if so, what benefits they received under their policy.
No application to the ISB is possible without a decision from the insurer. “The insurers know that, of course, and they rely on the customer going into their deal at some point so that he can finally rebuild,” says Kramer. The problem with the state funds: the customer is compensated for the damage to the building, but he also loses a lot, above all compensation for his own work and accommodation costs.
One problem was the quality of external experts
For all the criticism of individual insurers: There are also many positive examples among them, the lawyer emphasized. Basler, DEVK, Signal Iduna, Zurich and Generali, for example, “did a really excellent job”. In most cases, things also went very well with Allianz. Some insurers have an exemplary claims department, but suffer from the quality of the externally commissioned experts.
Krämer finds it incomprehensible when insurers stick with experts months later, even if the cooperation with them does not work well. “At some point you have to realize that it’s not working and replace your colleague.” Some insurers, on the other hand, quickly learned from difficulties and took appropriate measures, for example R+V, which according to Krämer initially had too few major claims adjusters. “R+V quickly adapted its claims routine to reality, and things are going well now.”
All in all, the insurers would have harmed themselves with delays, believes Krämer. The price hikes in reconstruction costs, which were initially seen as a temporary phenomenon after the flood, have become entrenched. “It’s just stupid not to release plaster for a few euros and let the weeks go by.”